overview of irc §501(r) requirements - arkansas hfma · 2017-10-12 · overview of irc §501(r)...

10/12/2017

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Page 0November 8, 2012

Georgia HFMA Fall Institute

Management / Sales MeetingMay 2017

501r Financial Assistance Policies

October 19, 2017

November 8, 2012


∗ Added by Patient Protection and Affordable Care Act (PPACA) of 2010 §9007

∗ Applies effective 2010 to 501 c (3) Charitable Hospital Organizations

∗ Finalized Regulations went into effect for taxable years December 29, 2015

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Overview of IRC § 501(r) requirements

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November 8, 2012


1. Written Financial Assistance Policy

2. Limitations on Charges

3. Prohibition on Certain Collection Efforts

4. Community Health Needs Assessment

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Overview of IRC § 501(r) requirements



∗ IRC §501(r)(4) requires a hospital to establish a written financial assistance (FAP) and a written emergency medical care policy

∗ Must apply to all Emergency and Medically Necessary Care

∗ Must be widely publicized

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501r4/Written FAP

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FAP must include:

∗ Eligibility Criteria for financial assistance and whether such assistance includes free or discounted care

∗ The basis for calculating amounts charged to patients

∗ The method for applying for financial assistance

∗ The actions which may be taken in the event of nonpayment, or a reference to the hospital’s billing and collection policy

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501r4/Written FAP



FAP must include continued

∗ Any information obtained from sources other than the individual, which the hospital uses to presumptively determine FAP eligibility, and under what circumstances it uses them.

∗ A list of any providers, other than the hospital facility itself, delivering emergency or other medically necessary care in the hospital facility that specifies which providers are covered by the hospital’s FAP and which are not.

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501r4/Written FAP

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Eligibility Criteria and Basis for Calculating amounts charged to the patients must include:

∗ Specify all financial assistance available under the FAP, including all discounts and free care

∗ Also includes the amounts (i.e. gross charges) to which discount percentages will be applied

∗ Specify all of the eligibility criteria that an individual must satisfy to receive each such discount, free care, or other level of assistance

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501r4/Written FAP



Eligibility criteria continued: ∗ Must state that a FAP-eligible individual will not

be charged more for emergency or other medically necessary care than the amounts generally billed to individuals who have insurance covering such care (AGB)

∗ Must describe in detail the basis for determining AGB (including the percentage if you use the lookback method) or otherwise explain how members of the public may readily obtain this information in writing and free of charge

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5014/ Written FAP

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Method for Applying for Financial Assistance

The FAP must describe how an individual applies for financial

assistance under the FAP

∗ Either the FAP or the application form (including accompanying instructions) must describe the information and documentation, that may be required from an individual to submit the FAP application. Hospital must provide contact information for assistance in filling out application.

∗ Financial assistance may not be denied under the FAP based on an applicant's failure to provide information or documentation, that the FAP or FAP application form does not require an individual to submit as part of a FAP application.

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501r4/Written FAP



Method for applying continued:

∗ A Hospital facility may grant financial assistance notwithstanding an applicant’s failure to provide information or documentation required by the FAP. For example, relying on other evidence of eligibility or an attestation by the applicant to determine FAP eligibility.

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501r4/Written FAP

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Actions for Nonpayment

∗ Any actions that may be taken to obtain payment of a bill for medical care, including, but not limited to, any extraordinary collection actions (ECA)

∗ The process and time frames for taking ECAs, including, but not limited to, the “reasonable efforts” it will make to determine whether an individual is FAP-eligible before engaging in any ECAs

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501r4/Written FAP



Actions for Nonpayment continued:

∗ The office, department, committee, or other body with the final authority or responsibility for determining that the hospital facility has made reasonable efforts to determine whether an individual is FAP-eligible

∗ Items can be described in a separate billing and collections policy if:

∗ FAP references the policy

∗ FAP explains how to obtain free copy

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501r4/Written FAP

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Measures to Widely Publicize

∗ Make the FAP, FAP application form, and a “plain language summary” of the FAP widely available on a Web site

∗ Make paper copies of the FAP, FAP application form, and plain language summary of the FAP available upon request and without charge, both in public locations in the hospital facility and by mail, including, at a minimum, the emergency room (if any) and admission areas

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501r4/Written FAP



Measures to Widely Publicize continued∗ Inform and notify residents of the community served by the

hospital facility about the FAP in a manner reasonably calculated to reach those members of the community who are most likely to require financial assistance

∗ Notify individuals who receive care from the hospital facility by∗ Offering a plain language summary of the FAP during

discharge or intake

∗ Include a conspicuous written notice on billing statements that notifies and informs recipients about the availability of financial assistance and provides telephone number where they may receive more information, as well as web site address where FAP, application and plain language summary may be found. 13

501r4/Written FAP

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Measures to Widely Publicize continued:∗ Setting up conspicuous public displays (or

other measures reasonably calculated to attract patient’s attention) that notify and inform patients about the FAP, in public locations at the hospital facility, including, at a minimum, the emergency room and admission areas

∗ Can provide documents electronically, or direct to electronic copies on website, if the individual referring prefers

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501r4/Written FAP



Widely Available on a Web Site

∗ Can be Hospital facility’s own site or one by Hospital Organization that controls facility

∗ Can be another’s website as long as Hospital facility’s or organization’s own site contains conspicuously displayed link along with clear instructions for accessing document

∗ Any individual with access to the Internet can access, download, view, and print a hard copy of these documents without requiring special computer hardware or software

∗ Must be available without paying a fee or setting up an account

∗ The hospital facility provides any individual who asks how to access the FAP online with the direct Web site address, or URL, of the web page on which these documents are posted.

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501r4/Written FAP

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Accessibility to limited English proficient individuals

∗ To widely publicize its FAP, a hospital must accommodate all significant populations that have limited English proficiency (LEP) by translating its FAP, application form, and plain language summary into the primary language spoken by such populations.

∗ Must account for each LEP Group that constitutes the lesser of 1000 individuals or 5 percent of the community served by the hospital or the population likely to be affected or encountered by the hospital facility

∗ Can determine this with any “reasonable method” 16

501r4/Written FAP



Emergency Medical Care Policy∗ Hospital must establish a written policy that requires hospital to

provide, without discrimination, care for emergency medical conditions to individuals regardless of their eligibility under FAP

∗ Meet this criteria if in compliance with EMTALA

∗ The written policy must prohibit hospital from engaging in actions that discourage individuals from seeking emergency care such as,

∗ Demanding payment before receiving treatment for emergency medical conditions.

∗ Permitting debt collection activities that interfere with the provision of emergency medical care

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501r4/Written FAP

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Additional information

∗ Medically Necessary Care- May use definition in the State you are licensed, including the Medicaid definition, or a definition that refers to the generally accepted standards of medicine in the community or to an examining physician’s determination

∗ Establishing and Implementing the Policy- Authorized body of hospital adopts the policy, it is implemented and consistently carried out

∗ More than one facility- you may combine in one policy now, as long at that policy states which facilities it applies to. Also, if AGB is different between facilities you must clearly state that.

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501r4/Written FAP



∗ IRC § 501(r)(5) requires hospitals to limit the amount charged for emergency and other medically necessary care provided to individuals eligible for financial assistance to not more than Amounts generally billed to insured individuals (AGB)

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501r5/Limitations on Charges

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∗ Amounts Generally Billed may be determined with:

∗ Prospective Medicare Method

∗ Look-Back Method

∗ May only use one method at a time, but different hospitals operated by the same organization can use different methods

∗ A hospital may change the method it uses to determine AGB at any time

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Meaning of Charged

∗ A FAP eligible individual is only considered to be “charged” the amount he or she is personally responsible for paying, after all the deductions, discounts (including discounts eligible under the FAP), and insurance reimbursements have been applied.

∗ Therefore, in the case of an FAP eligible patient with health insurance, they are only charged what they owe after health insurance pays. It is fine, if the total amount paid by the patient and the health insurer exceeds AGB.

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Prospective Medicare Method ∗ Uses typical hospital billing and coding, as if patient

was Medicare or Medicaid Fee-for-service beneficiary.

∗ AGB is amount Medicare and Medicare beneficiary would together be expected to pay for the care

∗ Hospital can use Medicare and/or Medicaid. Must describe in FAP when Medicare will be used and when Medicaid will be used.

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Lookback Method ∗ Multiply gross charges for a service by AGB percentage or

percentages ∗ AGB percentage calculated by dividing the sum of all claims

for emergency and other medically necessary care that have been allowed by health insurers during a prior 12 month period by the sum of the associated gross charges for those claims

∗ Whether a claim is used in calculating AGB is determined by when they claim is allowed by the carrier, and not when the care was provided.

∗ Allowed amount includes the amount the insurer would pay and the amount the individual would be responsible for.

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Lookback Method continued:

∗ In calculating AGB, Hospital can use the following as Health insurers:

1. Medicare fee-for-service;

2. Medicare fee-for-service and all private health insurers that pay claims to the hospital facility; or

3. Medicaid, either alone or in combination with one of the above.

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Lookback Method continued:∗ Hospital can use one average AGB percentage for all

emergency and medically necessary care, or they can calculate multiple percentages for separate categories of care of separate items or services.

∗ The start date for applying the AGB should be by the 120th

day after the end of the 12-month period used to calculate it.

∗ Hospital can use all services provided in a 12-month period instead of emergency and medically necessary care in calculating the AGB.

∗ Hospitals that are covered under the same Medicare provider agreement may calculate one AGB across facilities using all claims paid to all those facilities.

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Other medical care∗ A hospital facility must charge a FAP-eligible

individual less than the gross charges for any medical care covered under the hospital facility’s FAP.

∗ Billing statement can state the gross charges for such care and apply discounts and deductions, provided the actual amount the individual is personally responsible for paying is less than the gross charges for such care.

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Safe HarborHospital will meet the requirements for limitations on charges, even if it charges more than AGB (or gross charges) if:

∗ The charge for excess of AGB was not made as a pre-condition of providing medically necessary care to the FAP-eligible individual.

∗ As of the time of the charge, the FAP-eligible individual has not submitted a complete application and has not otherwise been determined by the hospital facility to be FAP-eligible.

∗ If the individual submits a completed application and is determined to be FAP-eligible, the facility must refund amounts paid for care in excess of what they would owe, unless such excess amount is $5 or less.

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IRC §501(r)(6) requires a hospital make “reasonable efforts” to determine eligibility under FAP before engaging in Extraordinary Collection Actions (ECA) against any responsible party

Biggest change in finalized regulations is that there is a shift to notifying only the patient population you are taking ECA’s against. Not the entire patient population. Therefore, while retaining 240 application period, basically does away with 120 day notification period.

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501r6/Prohibition on Certain Collection Efforts



Extraordinary Collection Actions (ECA)

∗ Any action taken by hospital to obtain payment for care covered under FAP that

∗ Requires legal or judicial process, or

∗ Involves selling an individual’s debt to another party, or

∗ Involves reporting adverse information to consumer credit reporting agencies or credit bureaus.

∗ Deferring or denying or requiring payment before providing medically necessary care because of an individuals nonpayment of one or more bills for previously provided care

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∗ Extraordinary Collection Actions (ECA)∗ Actions that require a legal or judicial process include,

but are not limited to∗ Placing a lien on property

∗ Foreclosing on real property

∗ Attaching or seizing a bank account or other personal property

∗ Commencing a civil action

∗ Causing arrest or body attachment

∗ Garnishing wages

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∗ Extraordinary Collection Actions (ECA)

∗ Do NOT include∗ Certain debt sales

∗ Liens on certain judgments, settlements, or compromises (i.e. Hospital Liens)

∗ Filing of a Bankruptcy Claim

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Certain Debt Sales are not ECA’sDebt sale will not be considered ECA, if the hospital enters into a legally binding written agreement with the purchaser of the debt pursuant to which:∗ The purchaser is prohibited from engaging in any ECA’s to obtain

payment for care∗ The purchaser is prohibited from charging interest on the debt in

excess of the rate at the time the debt is sold∗ The debt is returnable to the hospital upon a determination by the

hospital facility or the purchaser that the individual is FAP eligible∗ If the debt is not returned, there must be procedures in place to

insure the patient does not pay more than he or she is responsible for paying as a FAP eligible individual

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Reasonable Efforts to determine FAP EligibilityPresumptive Eligibility

∗ If the individual is presumptively determined to be eligible for less than then most generous assistance under the FAP, the hospital must:

∗ Notify the individual of the basis for the presumptive eligibility and the way to apply for more generous assistance

∗ Gives the individual a reasonable period of time to apply for more generous care before engaging in ECAs

∗ If the individual submits a complete FAP application during the application period, process the application.

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Reasonable Efforts to determine FAP Eligibility

Notification and Processing of Applications∗ Notifies individual about FAP prior to starting any ECA

and refrains from initiating ECA for at least 120 days from the first post discharge billing statement

∗ In the case of an individual who submits an incomplete application, notify the individual regarding how to complete the application and give them reasonable time to do so.

∗ In the case of an individual who submits a complete application during the application period, process said application and determine if the individual meets the FAP criteria.

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Notification: The hospital will have notified an individual about its FAP if the hospital does the following at least 30 days prior to initiating ECA∗ Gives the individual at least one written notice stating financial

assistance is available, identifies the ECA’s the hospital intends to initiate to obtain payment, and states a deadline after which such ECA may be initiated, that is no earlier than 30 days after written notice is provided. Basically, patient is presumptively eligible for 30 days past last notice, so if you want to begin ECA at day 240, notice should go out on day 210.

∗ Provide a plain language summary of the FAP with the written notice

∗ Makes a reasonable effort to orally notify the individual about the hospital’s FAP, and how they can apply.

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Notification continued:∗ Hospital can provide notification simultaneously for

multiple episodes of care. However, can not begin ECA until 120 days after the most recent episode of care.

∗ Notification before deferring or denying care due to nonpayment of prior care:∗ Must provide written notice and FAP application

∗ Include deadline, after which hospital will no longer process the FAP application for previously provided care. Deadline may be no earlier than the later of 30 days after the notice, or 240 days after the date of the first post-discharge statement.

∗ If individual submits application on or before deadline, must process it.

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Plain Language Summary∗ Written Statement that notifies individual that hospital offers

financial assistance under a FAP and includes all the following (in clear, concise, easy to understand language):∗ Brief description of eligibility requirements and assistance offered∗ Direct website address and physical locations where copies of FAP and

application form can be obtained∗ Instructions on how to obtain free copies of FAP and application by mail∗ Contact information of hospital staff who can provide information about

the FAP and the application process as well as nonprofit organizations or government agencies capable of providing assistance with FAP applications

∗ Statement of the availability of translations of the FAP, application, and plain language summary in other languages

∗ Statement that no FAP eligible individual will be charged more than AGB for emergency or other medically necessary care

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Incomplete Applications

∗ Suspend any ECA’s

∗ Provide written notice that describes what additional information or documentation is required and includes a contact number for additional assistance

∗ If the individual completes the application within the application period (or, if later, within a reasonable timeframe to respond to additional requests), the hospital must process the application.

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Complete Application submitted

∗ Hospital must suspend all ECAs

∗ Hospital must make and document eligibility determination in a timely manner

∗ Hospital must notify the individual in writing of the determination and the basis for the determination

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Reasonable Notification efforts, continued: ∗ Anti-abuse rule- Can not use information obtained under

duress or through the use of coercive practices∗ Determination that patient is FAP eligible is reasonable

efforts, even if you fail to notify the patient of the existence of the FAP (presumptive charity).

∗ Hospital may postpone the processing of FAP application for patients, whom the Hospital believes may qualify for Medicaid, pending the outcome of the Medicaid qualification.

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Complete Application submitted – FAP Eligible∗ Hospital must provide a bill indicating the amount

owed and showing (or describe how to obtain) AGB for care and how hospital determined amount owed;

∗ Hospital must refund any excess payments made; and

∗ Hospital must take all reasonably available measures to reverse any ECA

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Reasonable Notification efforts, continued: ∗ Obtaining a signed waiver from an individual will not constitute

the determination that an individual is not FAP-eligible and will not satisfy the requirements to make reasonable efforts before beginning ECA’s

∗ If you sell or refer the debt during the 240 day application period, you must have a legally binding agreement with the party that no ECA’s will be taken, until reasonable notification has occurred, and all applications submitted during the application period will be processed.

∗ May print notices on billing statements, as long as they are conspicuously placed and of sufficient size to be clearly readable.

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∗ Grassley (Sept. 18th STAT editorial) continues to accuse hospitals of: demanding payment before services are provided, steering uninsured patients to clinics instead of the ER, referring patients to for-profit collection agencies, garnishing wages

∗ In 2016 Grassley made inquiry into actions at Mosaic Life Care, which revealed the facility was referring patients to in-house collections without offering charity. Result was them forgiving $16.9 million in debt.

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Recent Enforcement Actions

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∗ IRS to review Tax Exempt Status of each Hospital every 3 years

∗ To date they have completed 968 reviews, and made 363 referrals for field examination

∗ February 2017 IRS revoked the tax-exempt status of un-named hospital for “egregious failure when reviewed in the context of 501 ( r)”

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Recent Enforcement Actions



QUESTIONS?

Elizabeth S. Richards, [email protected]

m

770-261-1065

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overview of irc §501(r) requirements - arkansas hfma · 2017-10-12 · overview of irc §501(r)...

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